Two important services offered by financial institutions (banks) to its customers is the ability to make payments from the customer's accounts and the ability to execute the exchange of one currency. Currency exchange is also known as foreign exchange or FX. Customer payments are typically made in the form of wire transfers, checks or cross border wire transfers (transfers across national borders) to a beneficiary. Often a transaction by a customer will require both a foreign exchange and a payment. The FX transaction must take place first in order to obtain the correct currency for the payment (e.g., a payment in Deutschmarks (DEM) to a vendor in Berlin).
Historically, customers had to arrange such payments and foreign exchange on a one by one transactional basis. In an effort to reduce expenses, corporations are willing to allow trusted third parties, such as banks, to assume some of the functions associated with the payments process. Rather than support multiple processes internally to initiate different payment types, these corporations want their banks to assume some of these responsibilities. This form of outsourcing eliminates exception processing by the corporation and streamlines their payables operation
An existing solution for customers who do not maintain foreign currency accounts is to create an import file that could be transmitted to the bank where the FX deals could be contracted and settled. However presently, this solution requires manual intervention on the part of the customer to contract FX and release the payment. There is accordingly a need in the industry for a system which can receive payment and FX instructions from a customer and automatically execute the required FX contracts and settle the payments with the resulting funds from the foreign exchange.